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Senior living sector sees record investment

Eurobuild CEE 17 October 2019
Senior living sector sees record investment
Senior housing opportunity index

EUROPE Over EUR 700 mln has been invested into the senior living sector across Europe since the beginning of the year, which according to Savills is the highest level ever recorded.

The record high volume was largely due to two significant transactions in the UK: the forward purchase by Riverstone Living of the Royal Warwick Square project in London and the development of four retirement villages by Audley group with Octopus Investments and Schroder Exempt PUT. “The growing number of senior citizens living longer who have greater purchasing power, which they spend largely on housing, suggests the senior housing sector in Europe is backed by strong fundamentals and is bound to expand over the next decade and beyond. Increasing investor appetite has begun to put downward pressure on prime yields but they remain competitive compared to standard residential assets or commercial real estate. The less cyclical nature of this asset type is also particularly appealing to investors,” says Lydia Brissy, the director of European Research at Savills. Yields for prime senior housing currently range between 3.5 pct and 5 pct for direct-lease, depending on the country, location and quality of asset. According to Savills, the yield gap that senior housing offers over other asset classes ranges between 100 bps over prime multifamily and 66 bps over prime CBD-offices.

Poland, with its growing elderly population and a low number of homes and apartments per capita, is one of the top five countries where growth is expected in the sector.

The Polish senior living sector has so far only attracted a few institutional investors with Orpea Polska being the clear market leader. Currently, the company has 1,100 beds and is planning to develop projects with a further 1,600.

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